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Three Possible GDPR Scenarios, says Expert

By Ken Magill

When the EU’s General Data Protection Regulation goes into force in May the big unknown is
how European regulators plan to enforce it, especially since there are 28 independent Data
Protection Authorities or one for each member of the EU.

GDPR will require marketers, or data controllers as they’re referred to, to get consent to process
personally identifiable information from would-be email marketing recipients in clear language
that lays out exactly how the information will be used.

It will require the ability to prove consent was obtained. It will give people the right to obtain
any information held on them, the right to opt out and the right to have their information erased.
It also will require notifications of data breaches within 72 hours.

But with 28 different Data Protection Authorities, each with serious enforcement power, it is
impossible to predict what the GDPR rollout will entail.

“As we go from the preparation phase to the GDPR implementation phase, we don’t yet know
what the enforcement posture of the European regulators is going to look like,” said J. Trevor
Hughes, president and CEO of the International Association of Privacy Professionals. “Now to
be clear we’ve got 28 European regulators, all of which have independent regulatory authority
under GDPR.

“There is a convening body, the European Data Protection Board that will be put together for
May of this year and it is meant to be a steering committee to help guide some of this action, but
the regulators country by country remain very much independent and can act independently,”
Hughes said. “So it’s hard for me to predict what we will see.”

But there are three possible scenarios, said Hughes:

One, all 28 countries work through the Data Protection Board and take a very systematic and
strategic approach to enforcement.

 

“They identify, say, the top 10 enforcement priorities that they have in order to drive
marketplace behavior. They don’t go for the big fines even though they have them. They go for
exemplary actions and give an indicator to the marketplace as to what their expectations are. And
we see a steady succession of these cases come out and get settled.

“That will look a little bit like what the FTC [Federal Trade Commission] does,” he said.

A second possible scenario is an aggressive Data Protection Authority in some country decides
to really go after some cases, said Hughes.

“That could be really challenging because it may end up giving us an unclear picture as to what
the enforcement expectations are or the enforcement priorities are of the regulators are across
Europe,” he said. “They [the Data Protection Authorities] may be very diverse and disparate.”
The third and worst scenario is 28 independent Data Protection Authorities bringing their own
actions with their own priorities at their own pace and their own scale, forcing companies
monitor all of them, said Hughes. “I think that might be an extreme scenario,” he added. “I
would hope we would see more cohesiveness in their enforcement approach.”

The most unlikely scenario is that the EU Data Protection Authorities fail to enforce GDPR.
“What I can predict is that European regulators that by and large to this point have had relatively
limited enforcement capabilities will use these bright, shiny, new enforcement tools,” said
Hughes. “They now, for the first time, have really significant fining authority.”

Indeed, failing to comply with key GDPR provisions, such as failing to get proper permission,
can result in fines as high as €20 million ($23.9 million) or 4 percent of global annual revenue,
whichever is higher. Less severe infringements, such as not having records in order, could result
in fines of up to €10 million ($12 million) or 2 percent of global annual revenue, whichever is
higher.
GDPR applies anytime a European citizen interacts with an organization in Europe even if that
organization has no physical presence in Europe.
“European regulators and parliamentarians and legislators have made it very clear that GDPR
applies when a European citizen is accessing your goods, your services, your website, your
functionality in Europe,” said Hughes. “So if you’re putting up a website, European regulators
think that they’ve got hooks into you.

“If you’ve got European email addresses in your database, European regulators will expect that
you’ll be complying with GDPR,” he said.

However, Hughes also contends that acting in good faith to comply with GDPR is one of the best
regulatory protections a marketer can implement.

“If you can demonstrate to a regulator that in good faith you have done the hard work, you’ve
invested the time, you’ve made the effort to build your processes, your security, your data
protection controls, you’ve trained your organization so that they’re aware as to what your

expectations are, you will inevitably be seen more favorably than someone who has not done
these things,” he said.

“That can be the difference between getting a letter from the regulator saying: ‘Hey we see you
had a breach and we see that you’re handling it appropriately. We consider this matter closed’
and a regulator saying: ‘You had a breach and, oh, by the way, here’s the fine and here’s the
press release that we’re announcing today.”

This post is not meant to be construed as legal advice. For legal advice, consult an attorney.

GDPR: Dramatic Change in Permission Requirements

By Ken Magill

The EU’s General Data Protection Regulation goes into force in May and will be a permission
game changer for many organizations that serve Europeans.

It requires, among other things, explicit, provable permission from individuals to use their
personally identifiable information to send direct-marketing campaigns to them. The GDPR also
requires clear unambiguous explanations as to what the information will be used for, and the
collection of no more data than is necessary to execute the campaigns for which permission has
been granted.

From the text of the regulation:

Consent should be given by a clear affirmative act establishing a freely given, specific,
informed and unambiguous indication of the data agreement to the processing of
personal data relating to him or her, such as by a written statement, including by electronic
means, or an oral statement. This could include:

 

  • ticking a box when visiting an internet website

 

  • choosing technical settings for information society services or another statement or conduct
    which clearly indicates in this context the data acceptance of the proposed processing of
    his or her personal data

 

  • silence, pre-ticked boxes or inactivity should not therefore constitute consent

 

Consent should cover all processing activities carried out for the same purpose or purposes. When the processing has multiple purposes, consent should be given for all of them. If the data consent is to be given following a request by electronic means, the request must be clear, concise and not unnecessarily disruptive to the use of the service for which it is provided.”

The GDPR also requires additional explicit permission to use European consumers’ information
to send any direct-marketing that falls outside the scope of the original consent. It also allows
consumers to revoke consent at any time and “the right to be forgotten,” or the right to erase their
information.

The law also requires marketers—referred to as “controllers”—to be able to prove consent:

“Where processing is based on the data consent, the controller should be able to
demonstrate that the data subject has given consent to the processing operation. … [A]
declaration of consent pre-formulated by the controller should be provided in an intelligible and
easily accessible form, using clear and plain language and it should not contain unfair terms. For
consent to be informed, the data subject should be aware at least of the identity of the controller
and the purposes of the processing for which the personal data are intended.”

Does this mean email marketers will have to re-permission their house files?

Not necessarily.

It depends on how explicit and transparent the permission process was in building the file.
“GDPR is very specific,” said J. Trevor Hughes, president and CEO of the International
Association of Privacy Professionals. “You can’t capture consent for a very broad purpose and
interpret it broadly. The other thing that is pretty clear under GDPR that you can’t do is condition
access to a service on consent.”

There may be some marketers who send messages only to their own list who look at their
permission practices and decide they’re already in compliance with GDPR, said Hughes. Others
may have to re-permission their files.

“It depends,” Hughes said. “So many of these things are going to be on a case-by- case basis. The
expectation, though, is that specific consent means specific to the thing that you’re doing. You
should start from the point that if you’re doing something new, you need something new.”
One positive aspect of the GDPR’s requirement that marketers only collect the data they need is
that they will theoretically present less of a target to hackers.

“If you don’t have it they can’t hack it,” said Hughes. “That’s a pretty healthy hygiene idea that
the GDPR puts forward but so do good database architects:

If you don’t need it, don’t collect it in the first place.”

Google Wants Marketing Emails To Act Like Webpages

See Alchemy Worx Quoted Here

 

The Journey Of An Entrepreneur

Read Bill McCloskey’s Interview with SellUP’s Founder Allan Levy Here.

NEVER Clean Your List

Inactive Subscribers Are Still Valuable Customers! Click Here To Read Why.

 

 

Zen & The Art Of Subject Line Testing

Read Dela Quist’s extensive White Paper on Subject Line Testing  Here

 

Increasing Engagement is Good, But Probably Not the Way You Think

By Ken Magill with Allan Levy

Engagement.

With the possible exception of relevance, it is arguably the most overused word in email marketing.

Engagement became a hot topic in 2012 when deliverability professionals began touting it as a necessity for continuing to reach subscribers’ inboxes.

Their argument went that the criminal spam issue had largely been solved with filtering technology. As a result, they said, email inbox providers were going to turn their attention to the next problem: commercial senders with large, largely inactive files.

In the coming year, I think we will see more engagement-based spam filtering, so it’s going to be important for marketers to look beyond opens and clicks to determine who is actively engaged in their email program,” said Tom Sather, senior director of email research for Return Path, in 2012.

But the engagement discussion led some email-deliverability professionals to questionable conclusions, arguably the most damaging of which was counseling marketers to remove email addresses from their files after a certain period of no open or click activity—typically 18 months.

The result was a bunch of marketers needlessly butchering their email files, an often wrongheaded act that continues to this day.

In 2015, the email marketing world was rocked when ISP representatives at an Email Experience Council conference said they did not measure clicks, and that low levels of engagement alone would not get a sender blocked from reaching inboxes.

Did this development render engagement unimportant? No. It still has a relational effect on deliverability. But ISPs aren’t nearly as strict when it comes to engagement as many deliverability experts led their clients to believe. And culling email addresses simply because they have shown no opens or clicks in a certain period is not the way to approach the issue.

Of course, spam complaints and unsubscribes should be removed immediately. Hard bounces should also be removed after efforts to resolve the issue have failed.

But deliverable addresses that have been acquired on a permission basis should almost never be removed from a file solely for lack of opens and clicks.

They simply need to be treated differently than the addresses of folks that have been opening, clicking and buying.

First, the file must be segmented by address activity.

A typical email house file has a small percentage of super-active addresses with high average order sizes and lifetime value.  Then there will be a segment that is active, but not as active as the super-active segment.

Send more email to the super-active group, maybe seven emails a week as opposed to five and maybe two emails for the same promotion as opposed to one.

Send the slightly less active group more email but not as much as the super-active buyers.

Then there are the inactives. A typical house file will have a significant segment of addresses the marketer doesn’t even send email to anymore because of their inactivity. There is potential revenue in this group. They simply must be approached with care. But they should be approached with, say, one or two emails a month.

It is important to use the same IP address when sending to inactives as is used to send to the actives and super actives. This way, the weaker email addresses ride on the deliverability benefit of the main IP’s presumably good reputation. However, it is often a good idea to break the inactive segment into multiple mailings to avoid tripping inbox providers’ spam filters.

The key to intelligently increasing engagement is testing.

Test offers. Test creative.  Test frequency. Test segmenting parameters. Test the number of links, and calls to action, product mixes—anything that might get more recipients opening and clicking.

During this process, a smart marketer will continuously monitor for when addresses move into different segments, recreate the segments and treat them accordingly.

The marketer who segments, tests, resegments and adjusts email frequency accordingly will naturally increase subscriber engagement and get the side benefit of better deliverability without needlessly butchering their file.

 

From Peas in the 1890s to Email Today, 80/20 Applies

By Ken Magill with Allan Levy

 

What do peas, Italian wealth in the early 1900s and email house files have in common? The 80/20 rule.

Unfortunately, the 80/20 rule leads a lot of email marketers to punish 80 percent of their file out fear of disrupting the behavior of the 20 percent.

Marketers learn early in their careers—often in business school—about the 80/20 rule and how it applies to business: 80 percent of a company’s revenue is typically driven by 20 percent of its customers.

The 80/20 rule is also called the Pareto Principle, named after Italian economist Vilfredo Pareto.

Supposedly, Pareto noticed in the 1890s that 20 percent of the pea pods in his garden were responsible for 80 percent of the peas. He expanded the principle to economics, showing that 80 percent of the wealth in Italy was owned by 20 percent of the population. He introduced the concept publicly in 1906. 

The Pareto Principle has since been applied across countless subjects from quality control to productivity and human-resources management.

The 80/20 rule also applies to the typical email house file. Eighty percent of a company’s email-related revenue typically comes from 20 percent of its subscribers.

Sometimes that 20 number pushes closer to 30 but the concept remains the same.

Interestingly, in an age where marketers are awash in data, most do not make the effort to identify these two groups. In their defense, most are thinly staffed and have their hands full managing campaign minutia.

But identifying, segmenting these two groups and treating them differently can pay big dividends. Many marketers, for example, avoid sending aggressive offers and discounts for fear of training their best customers—the 20 percent—to wait for such offers before they buy.

Their fear is well founded when the two groups are not segmented.

But besides punishing 80 percent of their file for fear of disrupting the activity of the 20 percent, they’re losing out on potential incremental revenue. If they keep sending out the same types of offers that 80 percent of their file have not been clicking on, surprise, surprise, the 80 percent will continue not clicking.

So the way to approach these two groups is to treat them differently. Send the 20 percent more content, such as product recommendations based on their behavior, in-stock reminders and seasonal offers where applicable. Also, dial back the discounts with this group. Since they’re responsible for 80 percent of sales, a 1 percent margin savings translates into 4 percent that can be used to entice the 80 percent to buy.

Then take the 80 percent and start experimenting with offers aimed at getting them to open and click. A free-shipping offer to the 80 percent that isn’t offered to the 20 percent might be enough to show some uptick in key metrics. As always, the key is testing to see what gets some of the 80 percent engaging.

Which brings us to a side benefit. While there is some debate over how much of a role subscriber engagement plays in email inbox providers’ deliverability decisions, no one will argue that engaged subscribers are a bad thing.

The real debate is over how increased subscriber engagement is accomplished. Anyone can increase email engagement immediately by culling dormant addresses from their file. But they will also be culling potential sales.

Marketers who work on getting the 80 percent to open, click and buy get more revenue along with the deliverability benefit of higher subscriber engagement without butchering their file.

 

Why Do Consumers Buy? (Part IV: JCPenney’s Pricing Fumble)

By Joseph Orminski with Allan Levy

Consumers like to feel smart. Any sense of achievement when shopping is a feather in their cap. The science of the sale is simple – it hypes consumer emotions. When people have emotional reactions, it’s something they want to talk about it. In retail, when they talk about it, it generates a buzz. It’s a simple process: Show value to your customers. They’ll engage and feel accomplished. They’ll tell their friends how well they did, and those friends desire the same achievement. It’s free marketing when done properly and has benefited retailers for decades. So why did JCPenney, a household name in the retail space, felt it necessary to stray from a path that was working so well? Let’s explore how a strategic pricing misstep made nearly six years ago still haunts the massive department store chain to this day.

Don’t underestimate the power of discounting

In the fall of 2011, Ron Johnson was appointed CEO of JCPenney, with hopes that he could breathe new life into one of America’s oldest retailers. After just seventeen months — and several nearly irrecuperable mistakes — he was out. What happened? Everyday low prices happened. We’ll talk about coupons next. It’s important to break Johnson’s pricing strategy all the way down in order to pinpoint exactly where things took a turn. And it started with the prices.

Johnson had a vision to reinvent JCPenney in the vein of the Apple Store. If anybody was suited for the job, it was Johnson, who had been credited for shaping Target’s image and turning the Apple Store into a success. Johnson thought he had the recipe. The issue was that he neglected the target audience. The new low prices seemed enticing, but he took away the one thing JCPenney shoppers coveted — coupons. People loved their coupons.

As Johnson removed their beloved coupons and sales and increasingly focused on making JCPenney a hip “destination” shopping experience, he quickly learned his innovations were no match for discounting. From boutique stores within the larger store and upscale advertising to updated fixtures and improved merchandise quality, no upgrade stood up to the power of perceived value JCPenney had come to know and love. Many of the chain’s oldest and most loyal customers understandably felt like they were no longer JCPenney’s target market.

Give your customers small victories

Obviously, every consumer desires that diamond in the rough – the sale that’s too good to be true. What’s more common in the shopping experience are small victories. There’s a shift that occurs when a consumer finds a worthwhile sale they can tell their friends about. It’s an experience that fuels that sense of accomplishment we’ve discussed. Look at what I did! Shopping, in physical locations or on online, is a game. And consumers look for the small victories. Whether it’d be “limited time only” sales, special offers, or coupons, consumers are accustomed to playing the game and playing to win. The thrill of the chase was what Johnson underestimated.

Johnson thought it made sense to present realistic prices from the start, as opposed to the cloak and dagger sale routine. While it makes perfectly logical sense to deliver prices at which products are essentially arriving anyway, shoppers aren’t purely logical creatures. They’re lured not by the promise of fair pricing but by thrill of the chase. They want to hunt. And they want tools — coupons, markdowns, special offers. Replacing coupons with everyday low prices removed any sense of urgency or accomplishment for consumers. No more small victories.

Condition your customers

Consumers are very smart. They learn what to expect from you. The only measure of value JCPenney customers had was original price versus discounted price. And they demanded that perceived value. During more than a century of history, JCPenney offered a high-low pricing policy, in effect training consumers to expect sales events and attracting consumers who love sales. By eliminating those sales events, JCPenney took away a reason for consumers to shop the store.

It is possible that over time a new group of consumers would become attracted to JCPenney, who were less promotionally oriented, but this can take a long time. It’s also possible that the chain could recondition consumers to become less promotional, but this process is even more difficult and, in this case, unnecessary.

Everybody is on the discount bandwagon

Traditional department stores like Saks 5th Ave, Macy’s, and Bloomingdale’s are presenting discount divisions for a reason. They realize their customer’s want discounts too. And it’s an adapt or die situation for many of retailers. If you don’t give them the discounts they desire, somebody else will. Off the rack locations like Macy’s Backstage and Off 5th (Saks) are popping up to curb their once loyal customers back in the doors. These major retailers realize the power of discounting and are doing what they can to prevent the bleeding.

The takeaway

  • Understand your audience
  • Understand what they expect
  • Give them what they expect
  • Always be providing value
  • Be consistent

Sure, we’re talking about a department store behemoth in JCPenney. But these lessons are universal. Your marketing needs to provide valuable insight into consumer behaviors so you can better understand your audience. That’s the beauty of email marketing — transparency and insight. Understanding how, when, and when people are interacting with your brand is critical information that lends itself directly to conversations about pricing strategy. Why do consumers buy? A variety of reasons. But everybody loves value. Nobody knows your customer better than you, and providing value in a way that caters to your customers’ behaviors goes a long way.

The shopping experience is a game. And playing the game is oftentimes more exhilarating than actually winning. Markdowns, special offers, coupons, and promo codes are tools of the game, rewarding the consumer with a clear path to the value they seek. Be creative in how you present these opportunities in your emails. Real-time countdowns, limited-use promo codes, and clear calls-to-action can position you for conversions in your sales messaging.

Free shipping is another method of discounting that’s very enticing to shoppers. This is important to note as we approach the holiday season. With Black Friday and Cyber Monday on the horizon, the discounting competition is at an all time time. Consumers love free. So as you’re drafting your holiday email content and debating product decisions, consider offering free shipping as additional discounting method to increase sales.

Most importantly, be consistent. JCPenney made serious changes to their strategy, including  removing reference prices, eliminating coupons, and even changing their physical locations. And it all came at a cost. Don’t make significant changes unless it’s absolutely necessary. Condition your audience’s expectations. And always think about impact over time.

Discounting is a marathon, not a sprint. Don’t shrink your font sizes in emails or reduce your discount prices prematurely and be surprised when customers lose interest. Be bold and keep moving forward with your pricing strategy. And remember: the Macy’s, Bloomingdale’s, and J. Crews of the retail world are marking their territory in your customers’ inboxes with 40% off discounts everyday.

When it comes to your email marketing strategy, remember the small victories. That’s what consumers are looking for — a sense of accomplishment. It’s not always what you’re saying. It’s how you’re saying you sent. Be conscious and deliberate in your messaging, and don’t overthink your emails. You customers sift through 100s of emails a day. Be bold. Be seen. Be heard. And never forget the ABDs of perceived value: Always Be Discounting.